Charitable Innovation – Disrupting for Good

Charitable Innovation - Disrupting for GoodThe operational model for charities in this country is an ideal candidate for disruptive innovation. It strikes me as odd that charities, the organizations that really have the least to spend on marketing, spend such inordinate amounts of money and time on marketing to raise money. Does spending lots of money on fundraising actually work?

Let’s stop for a moment and look at how AIP defines acceptable charity performance:

  • Spending 60% or more of a charity’s budget on programs, and spending $35 or less to raise $100 in public support

Groups included on AIP’s Top-Rated list generally spend 75% or more of their budgets on programs, and spend $25 or less to raise $100 in public support.

Unfortunately, many charities don’t even meet the acceptable charity performance definition:

  • “It is sad that cancer charities, one of the most serious and popular giving categories, perform so poorly – half of the cancer charities that AIP rates in this Charity Rating Guide receive a D or F grade and only 37% receive an A or B.”

If we look across charity organizations as a whole, it is not a stretch to imagine that the aggregate reality is probably somewhere around spending 50% or less of their budgets on programs, and spending $50 or more to raise $100 in public support.

What greater positive benefit could we have on society as business innovators than to help create a disruptive business model for charities? What if we could stand the traditional, and hugely inefficient, model of list rental, telemarketing, direct mail, and list saturation on its head and instead imagine something different?

There has to be a better business model that we could collectively create as a gift to society that would increase the percentage of charitable revenue that actually goes towards the charities’ intended missions. If we created a new best practice that could be adopted across the industry, think about the impact we could have (equivalent of up to a doubling of monies raised).

I think we can distill the disruptive possibilities down to the following five key principles:

  1. Give consumers a way to offset negative side effects with a positive action
  2. Link fundraising efforts more closely to the benefit delivered
  3. Reduce fundraising friction
  4. Maximize existing communication channels to highlight benefits that others provide
  5. Improve Efficiency

Please download and read the white paper to look at the disruptive possibilities and charitable innovation opportunities each one presents.

And, if you would like to help evolve the ideas in the white paper, please post a comment with your thoughts, additions, or refinements, or join our Innovation Excellence group on LinkedIn and contribute to the discussion there.

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